Reference no: EM132727548
Question - By December 31, 2020, Ayayai Corp. had performed a significant amount of environmental consulting services for Blossom Ltd. Blossom was short of cash, and Ayayai agreed to accept a $154,000, non-interest-bearing note due December 31, 2022, as payment in full. Blossom is a bit of a credit risk and typically borrows funds at a rate of 15%. Ayayai is much more creditworthy and has various lines of credit at 8%. Ayayai Corp. reports under IFRS. The tables in this problem are to be used as a reference for this problem.
Required -
Prepare the journal entry to record the transaction on December 31, 2020, for Ayayai Corp.
Assuming Ayayai's fiscal year end is December 31, prepare the journal entry required at December 31, 2021.
Assuming Ayayai's fiscal year end is December 31, prepare the journal entry required at December 31, 2022.
What are the amount and classification of the note on Ayayai Corp.'s statement of financial position as at December 31, 2021?
Assume instead that Ayayai reports under ASPE and uses the straight-line method to amortize the discount on the note. What would the interest income be relating to the note for 2021 and 2022?
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